Argentine trade barriers unfairly harming burgeoning Paraguay

Paraguayan shipment containers exported through the port facilities of Argentina’s capital city of Buenos Aires have encountered additional obstacles since the beginning of 2012, immediately after Argentine President Cristina Kirchner’s administration adopted its ‘Early Export Declaration’(DeclaraciónJuradaAnticipada de Importación-DJAI) in February 2012. These blocking measures were expected sooner or later, considering the political measures taken against Paraguay by neighboring Argentina, Brazil and Uruguay at the MERCOSUR regional summit this June.

Unfortunately, it has proved to be ruinous for the Paraguayan economy since exporters to have had shipments held up in the port of Buenos Aires for week and even months. These actions taken by Kirchner’s administration, in the past year, have further deteriorated bilateral relations between both countries; their political disagreements have taken a new shape and further deepened the divide not only on political matters but also by Argentine obstacles to Paraguayan exports, point that has characterized Kirchner’s attitude towards landlocked Paraguay. Argentina continues to exercise what Paraguay regards as illegal authority by checking and unloading every exports container that comes from export dependent Paraguay.

Even though Paraguayan President Federico Franco’s government has sent a note of protest to the World Trade Organization and conducted many bilateral meetings with Argentinean counterparts, there is still no solution on the horizon. Argentinean authorities pretend that by controlling shipping containers, they are reducing drug trafficking in the area bordering Paraguay.

If this is the case, then why isn’t Argentina’s government keeping open its customs facilities open on a 24-hour basis? For example, the Customs and Immigration Office at Argentina’s port at Itati, along the Parana River, is closed during the weekends. In addition, Paraguayan individuals have frequently complained of discriminatory and illegal behavior on the part of Argentinean officials.

According to the Paraguayan Center for Economic Analysis (El Centro de Análisis y Difusión de la Economía Paraguaya (Cadep)), Argentina’s obstacles to Paraguayan exports have caused losses of $20 million to Paraguayan exporters so far in 2012. During the course of this year, 38 percent of outfit and clothing shipments have been affected by Argentina’s blocking measures. In addition, Paraguay’s exports of commodities have fallen by 3.7 percent. In general, Paraguayan exports have been negatively affected by the politically motivated actions made by MERCOSUR member countries, which have greatly damaged Paraguay’s potential for exports and growing presence in the global market.

Due to its abundant water and arable land, Paraguay can feed more than fifty million people thanks to its large quantities of grain production. It also one of the ten biggest exporters of beef in the world. Stevia, a plant native to Paraguay that is used as a non-caloric sweetener, is yet another product that Paraguay produces, along with sesame and tropical fruit and juice.

According to Eduardo Felippo, president of Paraguayan Industrial Union (UIP), “the exacerbating friction between Paraguay and its southern neighbor (Argentina) will never go away.” Felippo added that “even the Yacyreta Binational Hydroelectric Dam project didn’t prove to be a good investment, much less a success story for a brighter future in our bilateral relations… We should stop selling to Argentina and Brazil and seek other markets in the world, thereby diversifying Paraguay’s international markets and further industrialize [its] economy.”

Currently, President Franco’s government is analyzing the possibility of establishing new trade routes to Chile and other Pacific Alliance member countries. On my most recent trip to Paraguay, local businessmen and government authorities discussed with me the possibility that Paraguayan exporters may seriously consider shipping their abundant goods via air cargo to markets such as the United States, Colombia, Mexico or even across the Pacific Ocean. In the discussions, the example of Argentina’s direct air shipments of asparagus to the U.S. was cited as a model to follow.

Paraguayan President Federico Franco is seeking closer trade ties to the U.S. In November, direct flights to Paraguay from the United States were inaugurated by American Airlines. In addition, Franco is in the U.S. discussing with U.S. businesses the prospects for producing petroleum in Paraguay.

Spero columnist Peter Tase is an analyst of Latin American diplomatic and trade issues.